High-Quality Charter Schools Act

“25F. Contributions to eligible charter school organizations

“(a) Allowance of credit—In the case of an individual who is a citizen or resident of the United States (as defined in section 7701(a)(9)), there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 75 percent of the amount of qualified contributions made by the taxpayer during the taxable year.

“(b) Amount of credit—The credit allowed under subsection (a) in any taxable year shall not exceed an amount equal to the greater of—

“(1) 10 percent of the adjusted gross income of the taxpayer for the taxable year, or

“(2) $5,000.

“(c) Definitions—For purposes of this section—

“(1) Charter school—The term charter school has the meaning given such term in section 4310 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7221i).

“(2) Eligible charter school organization

“(A) In general—The term eligible charter school organization means an entity which—

“(i) is described in section 501(c)(3) and exempt from tax under section 501(a) and is not a private foundation,

“(ii) is a charter management organization (as defined in section 4310 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7221i)), or a charter school, that—

“(I)

“(aa) has received a grant for the replication or expansion of high-quality charter schools under section 4305(b) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7221d(b)), or

“(bb) manages or operates a charter school that has been supported under such a grant, or

“(II) has been selected by a State for eligibility under this section based on a determination by the State that the entity is in the highest 10 percent of charter management organizations (as so defined) or charter schools, as the case may be, for student performance in the State,

“(iii) separate from any other funds or contributions received by the entity, maintains and accounts for any contributions made by any person for the purpose of the creation or expansion of charter schools operated or managed by such entity,

“(iv) obtains from an independent certified public accountant annual financial and compliance audits, and

“(v) certifies to the Secretary (at such time, and in such form and manner, as the Secretary may prescribe) that the audit described in clause (iv) has been completed.

“(B) Independent certified public accountant—For purposes of subparagraph (A), the term independent certified public accountant means, with respect to an organization, a certified public accountant who is not a person described in section 465(b)(3)(A) with respect to such organization or any employee of such organization.

“(3) Qualified contribution—The term qualified contribution means a charitable contribution (as defined by section 170(c)) to an eligible charter school organization in the form of cash or marketable securities for the purpose of the creation or expansion of charter schools managed or operated by such organization.

“(d) Denial of double benefit—Any qualified contribution for which a credit is allowed under this section shall not be taken into account as a charitable contribution for purposes of section 170.

“(e) Carryforward of unused credit

“(1) In general—If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section, section 23, and section 25D), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.

“(2) Limitation—No credit may be carried forward under this subsection to any taxable year following the fifth taxable year after the taxable year in which the credit arose. For purposes of the preceding sentence, credits shall be treated as used on a first-in first-out basis.

“(f) Application of volume cap

“(1) In general—Subject to paragraph (2), a qualified contribution shall not be taken into account under this section if such contribution would result in the aggregate amount of credits claimed under this section exceeding the volume cap established under section 4 of the High-Quality Charter Schools Act.

“(2) State allocations—For purposes of the allocation made to a State pursuant to subparagraph (A) of section 4(a)(1) of the High-Quality Charter Schools Act, if a qualified contribution made by an individual residing in such State would result in the aggregate amount of credits claimed under this section by individuals residing in such State exceeding the allocation made to such State pursuant to such subparagraph, such contribution shall only be taken into account under this section if such contribution does not result in the aggregate amount of credits claimed by individuals pursuant to subparagraph (B) of such section exceeding the amount made available pursuant to such subparagraph.”

“I Eligible Charter School Organizations

“4969. Failure to expend receipts

“(a) In general—In the case of any eligible charter school organization (as defined in section 25F(c)(2)) which has been determined by the Secretary to have failed to satisfy the requirement under subsection (b) for any taxable year, any contribution made to such organization during the first taxable year beginning after the date of such determination shall not be treated as a qualified contribution (as defined in section 25F(c)(3)) for purposes of section 25F.

“(b) Requirement—The requirement described in this subsection is that the amount of qualified contributions of the eligible charter school organization for the taxable year which are expended before the expenditure deadline with respect to such receipts shall not be less than the required expenditure amount with respect to such taxable year.

“(c) Definitions—For purposes of this section—

“(1) Required expenditure amount

“(A) In general—The required expenditure amount with respect to a taxable year is the amount equal to 100 percent of qualified contributions for such taxable year—

“(i) reduced by the sum of such qualified contributions that are retained for reasonable administrative expenses for the taxable year or are carried to the succeeding taxable year under subparagraph (C), and

“(ii) increased by the amount of the carryover under subparagraph (C) from the preceding taxable year.

“(B) Safe harbor for reasonable administrative expenses—For purposes of subparagraph (A)(i), if the percentage of total qualified contributions to an eligible charter school organization for a taxable year which are used for administrative purposes related to activities for the creation or expansion of charter schools (as defined in section 25F(c)(1)) operated or managed by such organization is equal to or less than 10 percent, such expenses shall be deemed to be reasonable for purposes of such subparagraph.

“(C) Carryover—With respect to the amount of the total qualified contributions to an eligible charter school organization with respect to any taxable year, an amount not greater than 15 percent of such amount may, at the election of such organization, be carried to the succeeding taxable year.

“(2) Expenditures—The term expenditures includes amounts which are formally committed but not expended. A formal commitment described in the preceding sentence may include qualified contributions set aside for the creation or expansion of charter schools operated or managed by such organization for more than one year.

“(3) Expenditure deadline—The expenditure deadline with respect to qualified contributions for a taxable year is the first day of the fifth taxable year following the taxable year in which such qualified contributions are received by the eligible charter school organization.

“(4) Qualified contributions—The term “qualified contributions” means contributions eligible for the credit under section 25F.”